Yale Club of Beijing: Investment Trends in China’s Current Economic Environment

-Yale VC/PE panel: VC/PE Investment Trends in Current Economic Environment

What investment opportunities remain bright in China, despite the gloomy macroeconomic picture?  In what may have been an apt metaphor for the topic at hand, the Yale Club of Beijing hosted an all-star panel and drew a packed crowd at the Yale Beijing Center amidst raging wind and rain on a cold October night to address this essential question for the future of China’s development.
The panel consisted of thought leaders spanning the spectrum of investment opportunities, from early-stage venture to late-stage buyout, and from homegrown domestic Chinese funds to international investment banks, including:

  • Shirley Chen 陈十游 (SOM ’95), Managing Director at China International Capital Corporation Limited
  • Sally Shan 单丽红 (SOM ’97), Managing Director and Head of China for HarbourVest Partners
  • Bing Yuan 袁兵 (JD ’98), Managing Director at Hony Capital
  • Sean Fan 范翔 (YC ’99), Managing Director at Goldman Sachs PIA
  • Tina Tao 陶宁 (SOM ’10), Chief Operating Officer and Partner at Sinovation Ventures
  • [Moderator] Benjamin Cheng 郑国器 (M.A., ’87), Senior Advisor to the Danish IFU

Despite the torrential elements outside, there was no lack of energy and optimism within the crowded auditorium. The panelists were enthusiastic about many specific areas of investment opportunity despite China’s macroeconomic headwinds.

t was generally agreed that China is indeed going through a period of adjustment as the high cost of money and low cost of labour each invert polarity, leading to rising debt and the potential to fall into a “middle income trap.”  However, a number of industries continue to be propelled by the development and commercialization of new technology and the fast-changing habits and increasing standards of the Chinese consumer.  Particular areas that were highlighted include AI, autonomous vehicles, machine learning, CRM, cloud computing, data security, restaurant chains, food safety, brands, media and entertainment, education, hospitals, healthcare, and many more.  Where the panelists were perhaps less bullish were areas such as e-commerce, O2O (online to offline), schools (as investments), and cleantech.

The discussion also drilled down into the specifics of taking advantage of these opportunities as a VC or PE firm, including the latest thinking around USD vs. RMB funds, team structure, and even CSR and governance.  Specific topics of interest included fundraising and LP management, exit opportunities, investment horizons, advantages and disadvantages of generalist versus specialized approaches to investment coverage, and environmental responsibility.

Overall, the event was successful by any measure – the turnout exceeded capacity, the information shared was rich and detailed, and the panelists spoke with eloquence, humour, and humility, leading the crowd on a journey that provided context from the past and inspired hope for the future.